Monday, May 10, 2010

Wall Street Journal reports Ratner had decided to ditch Gehry by November 2008, portrays sale to Prokhorov as a coup

In anticipation of the expected transfer of the New Jersey Nets to Russian billionaire Mikhail Prokhorov, developer Bruce Ratner granted what the Wall Street Journal described as a "rare interview" and was rewarded with an article that, while portraying him as bruised by the experience of ownership, delves neither into questions about Prokhorov nor the propriety of the latter's benefiting from significant public subsidies and eminent domain.

It's the Wall Street Journal, after all, a respected publication, but with the business class in mind. The headline: Bruce Ratner's NBA Waterloo.

The article reminds us that, as was obvious, Ratner became a sports team owner as leverage for a real estate deal. Eric McClure of NoLandGrab reminds us, Wait — we thought it was "100% about basketball."

Ratner thought project was dead?


The WSJ reports:
Mr. Ratner's employees speak of how he was always optimistic about his project, through six years of litigation and a global financial crisis, when, in basketball parlance, he learned to rebound. Mr. Ratner always promised his troops they would figure out a way to keep alive his dream of moving the basketball team into a gleaming arena in Brooklyn. He didn't tell anyone what he really thought—that the project was dead.
Ditching Gehry

The WSJ's Matthew Futterman pinpoints November 2008 as the moment when Ratner ran the numbers and, "[w]ithin hours," decided to ditch Frank Gehry as the arena designer.

Oh. That's not what they told us.

Yes, the New York Daily News and the Wall Street Journal both reported the next month that Gehry had laid off his staff.

New Jersey Nets CEO Brett Yormark, in March 2009, told WFAN:
"Frank Gehry is still the architect of this project. And he loves it. It’s very dear to his heart, no different than it is to all of us – Bruce Ratner, our investors and myself."
The New York Daily News reported in May 2009:
Ratner spokesman Joe DePlasco said a reevaluation of Gehry's design would be completed by July, at which point Ratner will determine whether the world-famous architect would remain on the project.
Revising the deal

The Journal reports:
He also knew he'd have to delay construction of his commercial and residential buildings and negotiate a new deal with the state's Metropolitan Transit Authority. In the previous deal, he'd agreed to pay $100 million for the 22-acre site where the project, known as Atlantic Yards, will be built. But now he would have to replace that lump sum with a series of staggered payments.
(Emphasis added)

Oh, he would, would he? (If only he'd have to pay $100 million for the entire site, rather than for the 8.5-acre railyard. The article has since been updated to eliminate the words 22-acre, but now it sounds like Ratner bought the whole site for 22 acres. Not so.)

The framing here suggests, not without foundation, that Ratner is fully capable of getting public agencies to renegotiate. Whether that's a good thing or not goes by the wayside.

The Prokhorov rescue

Ratner is described as pulling of a coup in getting Prokhorov to invest in the Nets. True, he found one of the few people in the world with the liquidity and the interest in investment.

Then again, didn't Prokhorov get a bargain? And doesn't he deserve a smidgen of scrutiny? The Journal doesn't even approach the Times, which inconclusively looked into Prokhorov's activities in Zimbabwe.

Ratner comes out ahead?

The Journal reports:
Mr. Ratner predicts that when the arena opens in three years, the value of his stake in the team and the surrounding real estate will exceed what he paid for the Nets and also what he sustained in losses during the six-year battle for the project.
Well, maybe. A new arena--expect to open in 2.5 years--would significantly raise the value of the team. Whether it would raise the value of real estate destined for housing is another question. The key issue is the provision of tax-exempt bonds for construction.

After all, as his cousin Chuck Ratner once said, "we still need more" subsidies.

A correction

The article describes the project's location as "downtown Brooklyn"--not so--but appropriately points out it's across the street from Ratner's malls (which actually opened in 1996, not "a decade ago").

Arena 2012 or 2013?

The article leaves some wiggle room for arena delays, noting that the team would go "to Brooklyn in two or three seasons."

No comments:

Post a Comment